I see no reason why VHDL or Verilog code can't spread across the internet as fast as C code can. If anything, HDL code is easy to understand and collaborate on. A bunch of knowledgable (CE grad students) people work on low-level blocks (adders, shifters, register files, etc.), a crew of less knowledgable people (right out of intro to CE) stuff them together into functional blocks (execution units, decoders, etc.), and a few motivated experts looking for a good PhD thesis design the pipeline, architecture, and instruction set.

They have these things called simulators. They interpret and simulate the HDL code, so the community can test the resulting design iterations in preparation for a production release. Send it off to a contract foundry (TSCM, UMC, Chartered, etc.), and sell the chips for just enough to recoup the manufacturing costs.

The only thing missing (when compared to open source software) is the instant gratification of compiling and running the code at various points during the development process. Our hypothetical "OSH" community would make 1-2 production runs annually.